Borrowing exceeds Brown's forecasts

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The Independent Online

The conservatives yesterday challenged the Government to "come clean" over the need for hikes in taxes after official figures said public borrowing so far this year had exceeded Gordon Brown's forecast just a month ago.

The conservatives yesterday challenged the Government to "come clean" over the need for hikes in taxes after official figures said public borrowing so far this year had exceeded Gordon Brown's forecast just a month ago.

The Government borrowed £5.2bn last month to take the deficit in the first nine months of the fiscal year to £37.1bn compared with a forecast of £34.2bn for the year to April.

Oliver Letwin, the shadow Chancellor, said: "These figures show the poor state the public finances are in under Mr Blair. He should break the habit of a lifetime and come clean about which taxes he would put up."

Mervyn King, the Governor of the Bank of England, has urged the Government to ensure it met its golden rule - to balance the books over the economic cycle - over the years.

Stephen Lewis, chief economist at Monument Securities in the City, said: "Mr King is likely to have looked with dismay at [today's] public finance figures. The need for lower public spending and/or tax increases is becoming inescapable."

But the monthly deficit was less than expected and the Treasury insisted it was on track to meet its fiscal rules, saying tax receipts were rising and spending slowing in line with its forecasts.

The Office of National Statistics said public sector net borrowing (PSNB), the preferred measure of public finances, was £5.2bn in December, £2.3bn less than the same month a year ago. Total receipts so far this year have risen at an annual rate of 7.2 per cent, in line with Treasury forecasts and up from November's 6.8 per cent. Annual spending growth has fallen from 7.4 to 6.2 per cent between November and December.

Analysts said that January, which is a strong month for self-assessed income tax, VAT and corporation tax, and February tended to produce surpluses.

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